When iiNet bought up South Australia-based ISP, Internode, late last year it cemented the company’s position as one of the country’s biggest telcos.
Analyst firm, Ovum, predicts iiNet will be one of the around five ISPs operating on a national scale once the NBN is deployed on a broader scale in a few years time.
So far we have Telstra, Optus, TPG and iiNet. So which one is the fifth?
The answer, according to Ovum research director and telco analyst, David Kennedy, is Vodafone Hutchison Australia.
With no fixed-line footprint in Australia, Vodafone joined the NBN mainland trials in May last year.
“The NBN trials are a great opportunity for us to learn how the NBN will complement our existing mobile network,” Vodafone CEO, Nigel Dews, said at the time.
To date, there are only a handful of customers testing out a Vodafone NBN connection.
So how will a telco which has no fixed-line presence in Australia become one of the top five players as the NBN is rolled-out?
Vodafone’s presence in the New Zealand fixed-line market does help. The company started offering home phone and broadband services a few years back and now has a decent-sized customer-base across the Tasman.
It currently offers a number of bundled home phone and broadband deals with a starting price of $NZ70 per month for a basic 3GB package.
“If Vodafone were to get into the Australian fixed-line market it would come in at a fairly strong position because it already has a large customer-base it can cross and upsell to,” Kennedy told ARN.
A 4.2 million postpaid customer-base to be exactly.
But will Vodafone’s public image in Australia, which took a beating in 2011, affect its chances of becoming one of the top dogs in the fixed-line broadband market?
“Not in the long run, no,” Kennedy said.
Having battled bad press over its customer service and mobile network performance in the last 12 months, Vodafone has committed to investing heavily in resuscitating its network and brand.
“The company will have to work at it but it’ll have a strong network platform in the future,” Kennedy said. “In the medium term, obviously it’s had problems, but in the longer term it’ll recover and, who knows, maybe another telco will start having big problems.”
Consolidation in the ISP space will obviously mean less choice for consumers but the Ovum analyst isn’t fazed by that prospect. The choice at the top end might be more restricted, he said, but there will still be around a hundred small specialist ISPs in operation.
“I think five or six national ISPs is enough to ensure there will be genuine competition,” Kennedy said. “Now if we start getting down to four or even three national operators, I think there will be a problem.
“But I don’t think we’ll go that far because, if nothing else, the ACCC will not let it go that far.”
As a result of the $11 billion deal with NBN Co, Telstra effectively receives money every time it shuts down a copper line service to customers.
That means it will have the resources to maintain a strong position when the NBN starts being rolled out to the mass market.
“Telstra can use that payment to fund marketing and so on,” Kennedy said. “It can literally afford to have somebody door knock every house in Australia.”
In NBN-related news, Optus recently signed a 12-month wholesale broadband agreement (WBA) with NBN Co. This means it can start offering NBN services to customers over that period.
So far 25 ISPs have signed an WBA with NBN Co. Telstra has yet to do so.